I founded Endpoint Technologies Associates, Inc., an independent technology market intelligence company, in 2005. Previously, I was vice president of Client Computing at IDC, covering client PCs (desktop and mobile computers). Before that, I ran my own research and analysis firm, directed operations for a developer of multilingual text processing software, ran a technology analysis and publishing practice for a consulting company, managed international accounts for a data communications equipment manufacturer, and did new product development for a computerized trading network. I have published in a variety of forums and been quoted in a number of publications and other media outlets. I snagged a B.F.A. from Bennington College and an MBA from the University of Chicago Graduate School of Business. I am multilingual, world-traveled, and have bicycled over the Alps, but am now a family man.
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Reorganizing Chairs On The Microsoft Deck

AllThingsD: reporter Kara Swisher “broke” the “news” yesterday that MicrosoftMicrosoft is reorganizing — again. Apparently that leaky ship is selectively disclosing information about who will do what to whom sometime in the nondescript future. I’m sure this reorg will be just as effective as the past couple of dozen.

The cuckoo concept behind this latest chair-swizzle seems to be that a company formerly known for its software will now become a “devices and services” company. Swisher’s sources seem to indicate that execs from Server and Tools, Skype, and Interactive Entertainment divisions will be getting the nod. Windows and Office under the expected new regime: fates unknown.

Devices and services …

Now, let me get this straight. This company — whose hardware resume sports the Hardware Group, which makes, mice, keyboards, cameras, and other peripherals as well as doing development for the company’s other groups; XBox in its various forms, the one clear winner; Surface, the Win8 showcase platform that’s doing meh; and various losers like Zune, Spot Watch, and Kin 1 and Kin 2 — wants to dial up its hardware business? This company, the one that surfaced Surface right before the holidays last year with no clear view of how to manage a production and distribution ramp, wants to draw guns against, say, Samsung and AppleApple? Bokay …

As I was preparing to write this note, I went over my historical file for Microsoft and reviewed the sorry history of Zune. From its rumored announcement in 2006, through the delusional marketing, product tweaks, and policy changes that followed, to its quiet retirement sometime in 2011, Zune was emblematic of how Microsoft does hardware development, branding, and distribution. Of course, it can buy the business, as it did to get XBox 360 out of the gate and into people’s homes. Still, I remain skeptical.

And services. Well, that term can cover a host of evils. For example, Verizon CommunicationsVerizon Communications pumps you bits over pipes, sends you a bill, and calls that service. Just try to get a Verizon rep on the phone and you’ll run into that other definition of service: people helping people. The big Redmond software company has never been great on service of the second sort, be that help for Windows (get that from the OEM partners: DellDell, Hewlett-PackardHewlett-Packard, Lenovo, Acer, ToshibaToshiba!) or Office (same thing! We don’t sell to end users and wouldn’t know what to do with one if it floated in on the breeze).

Then, there’s the definition of service that includes how prize bulls are set up to impregnate cows. This kind of service, related to what phone companies do, definitely falls within Microsoft’s skills. Essentially, performing such service involves setting up a billing machine and turning the crank. Microsoft has been converting its software businesses over to this model as rapidly as it can with offerings like Office 365 and InTune. I wrote a piece in 2011 about InTune that Microsoft truly hated, essentially saying that it was too expensive for ordinary people to be successful. Despite my repeated offers to revise the piece based on whatever sales data the company might supply, it has never come back to me with any.

Microsoft’s ability to fool all of the people all the time has pretty much come to an end. Folks just don’t want to buy software every few years anymore. So, the company is trying to hook up an intravenous feed from your bank account to its own, dripping a few tens of dollars a month with no need to renew. Some people may go for that, but it’ll be interesting to see how it plays out.

Over the next few years, it may be that Server and Tools becomes the backbone of a more enterprise-focused Microsoft, with cloud services being a large component of the offering. Certainly, the company has the capital to invest in building large infrastructure businesses that can be billed back to customers on a subscription basis. Arguably, this is what the company should have been doing all along, once the market began to shift over to mobile devices and cloud services.

But CEO Steve Ballmer has been slow to react to market changes. Maybe he needs servicing.

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